The  power that OTAs have in the market is growing. Consumers increasingly look towards the largest  OTAs, often at the expense of the travel suppliers such as airlines and hotel chains. But why do OTAs keep winning? And  more importantly, how can loyalty programs benefit from this success story? Get answers to these key questions and discover 3 ways to grow engagement with online travel rewards.

There is no  doubt that travel  experiences can create strong engagement for loyalty programs. The  excitement  of saving up  points  for a  trip,  the satisfaction  of redeeming  a  long-awaited holiday,   or  sharing   photos   from  an   amazing   adventure  all   create   powerful  positive associations  for brands. And  naturally,  today’s consumers expect to be able  to easily  access such travel rewards online and via mobile. So in order to map out how to unlock engagement through travel rewards, we  need to first and  foremost take a closer look at  the landscape of online travel agencies (OTAs) and  their success story.
 
A recent study by PhocusWright identified customers’  top reasons for using  an  OTA rather than booking directly with the airline  or hotel. What might come as a surprise is that the #1 factor is not about the better
product selection or bundling multiple  products at once: it’s about the usability of the digital booking interface. It’s about a customer journey that is easy and convenient. Similarly, panel discussions at leading industry events such as WebInTravel and EyeForTravel consistently agree on the top winning factors for OTAs: innovation in user experience ranks as most important, followed only by product choice.
 
But you might think that travel suppliers will catch up eventually. After all, the booking interface is something that’s not hard to copy from the OTAs. However, EyeForTravel concluded in January 2017  that travel suppliers will struggle to make the necessary advances fast enough to close all the gaps. Because it’s not just about  UX.  It’s  also  about  data collection, data usage and advanced marketing techniques - particularly personalization. This is where the OTAs  have an  enormous  advantage, since they have a broader view of the customer,  and can collect far more valuable data. Catching up on this front  will  be challenging  for airlines  and hotels,  and require huge investments  that no  single  supplier  can manage.
 
So – the OTAs  continue to dominate in  the market because they offer the best and most compelling  user experience. However, there’s one major thing the  OTAs don’t have a lot of, and that’s  customer loyalty! In  today’s  comparison-shopping  online  environment, where Kayak or Trivago will quickly show you where to grab the  best  rate for a  flight  or hotel, consumers regularly book with whatever merchant provides the  best  deal, rather than sticking to one trusted provider. This dynamic is the key to how loyalty programs, whether in retail,  financial services, travel or other verticals, and  OTAs can benefit from each other.
 
Large loyalty programs are engagement experts and have a loyal base of repeat buying customers. They also own large amounts of valuable customer data that can be leveraged for offer personalization. These are extremely valuable assets for an OTA.
 
OTAs on the other hand have a very relevant and aspirational consumer product with generally very attractive margins (putting flights aside for a moment) that can be used to fund rich loyalty point accrual or compelling reward redemption value.
 
It’s a match made in heaven, and these synergies give rise to 3 simple ways for loyalty programs to grow customer engagement by collaborating with  OTAs.
 
1. Rewards accrual via OTAs
Programs can partner with an OTA to have them fund accelerated rewards earning for members when purchasing travel. This simple and easy partnership construct has already gained significant popularity for hotel bookings, which offer particularly rich margins. Great examples include Uber partnering with Kaligo.com to offer free rides on hotel bookings, or Amazon working with Rocketmiles to offer its customers Amazon credits. For point-based loyalty programs, accelerated accrual on hotel bookings means that your members are earning points 5-10 times faster than usual, and reach their next reward redemption much sooner – all funded entirely by the OTAs.
 
2. Accrual white label
The accelerated accrual model in #1 can be taken to the next level with a white label partnership. When loyalty programs partner with an OTA for accrual and send customers to the OTA site to book, one aspect they miss out on is controlling the customer experience and of course collecting and owning the usage data. That’s  why the  next  option  is to move the same concept into a white label model, which  includes all the benefits of an OTA accrual partnership plus ownership of the branding, data and customers. The platform is then powered by the  OTA, but  data and control sits with the loyalty program. The effort on both sides to implement such a construct is naturally much greater, which makes it best suited to the largest loyalty programs.
 
An example of a white label platform, powered by loyalty OTA Kaligo Travel Solutions.

3. Reward redemption
The third opportunity is online travel redemption. For years, loyalty programs have focused primarily on driving  accrual, but a program’s long-term success requires attractive, diverse and easy redemption options. Being masters at user experience and driving conversion, OTAs are well-placed to deliver an easy and engaging redemption experience. Including the ability to easily combine points and cash to book makes it even easier for customers to reach their next reward. Similar  to #2, a white label implementation has the benefit of full control over customer journey and data.
 

So  in  a  nutshell,  OTAs  make  attractive  partners  for  brands  and   loyalty   programs  across industries! Start out by  partnering  on accrual. Leverage their innovation and reach, while providing them with  your strengths in loyalty. And for the ultimate proposition, implement an online travel white label  to maximize customer engagement and user ownership.

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